[edit] So as not to be confusing, per the below I stated I’d take further action from the defensive side of GDX loses preferred support, and also stated that I believe this to be a buying opportunity. Both things can be true. In the case of the upper support holding, no further defensive action would be taken and that could be the opportunity to add. In the less favored case of a drop to 46 buying could be done after additional defensive measures are taken and then released.
I highlight and discuss chart gaps perhaps more than they warrant, since there is far more to a technical picture than gaps. Still, if they are on the downside it is better to get them out of there and if they are on the upside, they add some consideration to the upside targeting.
GDX (daily) has filled both of its nearby lower gaps this morning and that is a good thing. Could something more severe unfold, dropping GDX to the gap near 46? Sure. But the last week has had a lot of knee-jerk type energy in the markets, from FOMC to bombing to jawboning about halting the bombing. That is all short-term sort of “flash point” stuff. Hence, I favor this correction being shorter rather than drawn out.
One thing is for sure. This pullback makes perfect sense in light of the flak I caught for writing the title:
Late Innings For the Gold Stock Rally
That title was meant over the longer-term with the HUI 500 upside target still in play. But the defensiveness displayed by inexperienced and/or biased gold bugs defending their position was a classic sign the sector needed cleaning. A cleaning can prepare the situation for a run to target.
It looks like GDX will test the SMA 50 and it is already testing the short-term lateral support zone it is rising into. I have partially hedged again, and if the SMA 50 looks to be taken out I may increase the hedge and/or do a little more profit taking. I would not like to ride down to 46 without further action.
GDX is testing the favored support area today, per June 20 NFTRH+ update:
Technically, the GDX daily chart shows an unsurprising (it’s FOMC week, after all) fade, probably to at least fill the upper gap. RSI sucks (negative divergence) and MACD is questionable. The chart could easily test the uptrending 50 day moving average at 50 and fill that gap as well. Conveniently, that would test a short-term support area.
However, the 46 area is possible. Not favored. But also possible depending on the wider macro situation and its weekly inputs (politics, jawbones, war) and the knee-jerking of the herds.
I also see this as a perhaps last opportunity to add positions.
